Paul Janisch

New Equitable Economic Empowerment Framework (NEEEF) conference 28 June 2017

What is it about Namibia and Namibians? They are so different to us.  They just want to get on with their lives and business and are willing to talk to each other in a constructive way to do this.  I was invited to present a paper at a NEEEF conference in Windhoek a few weeks' ago, as it turns out I ended up chairing it (they told me when I arrived I was the man to do this).  They asked me to speak about a localisation strategy but I chose to speak about what Namibia could learn from South Africa - I'll save the cynicism for a later post.  

Namibia is about 15 years behind South Africa when it comes to a national empowerment policy.  Established business is nervous about the policy and the policy is vague and in draft format.  What I found interesting was how white business was nervous and government saw the need for the policy (like we were fifteen years ago), but they want to talk to each other.  This conference was apparently a political hot potato.  The organisers had been trying to arrange it for the last year and had come across major hurdles.  The public wanted the conference because they wanted some information and so they got it.  The speakers were extraordinary (I thought I was pretty good too), I don't know if I have been to a conference where speakers managed to hold the attention of the entire hall for the whole day.  

Each speaker put their case strongly from the objective Ngoni Bopoto, the Namibian economist who painted a solid picture on Namibia's current economy through to Phillip Ellis, who made no bones about his capitalist slant.  On the way we were given an overview of the Employment Equity Commissioner's thoughts on the necessity for redress.  The commissioner, Vilbard Usiku, is one of those rare policy makers who comes across as objective (like Thuli was when she was public protector).  I learned more about South Africa's apartheid legislation from Vilbard than I will from any of the current anc politicians.  He has given me a copy of his speech which I would be more than happy to disseminate to anyone who requires it.  We heard from the lawyers tasked with getting the draft bill promulgated.  Again there was no "like or lump it" attitude here, I got the distinct impression that they want the process to be accepted by those who need to implement it.  The highlight of the conference for me was Phillip Ellis.  Phillip was concerned about NEEEF (pronounced NeeYIF) because it had been a mooted policy for years. It started off its life as TESEF,  and slowly migrated across to NEEEF.  A draft of the NEEEF bill has been available for comment for the last few years.  Phillip is a very respected businessman and adviser to many businesses (both local and foreign)  and he reckons that this uncertainty is hampering investment in the country.  He told an interesting anecdote how a certain large South African company wanted to uproot to Namibia after zuma's Nene firing but refused to come because of the existence of the policy in draft format. Phillip quipped that people would prefer to have the finalised policy than the sword of Damocles.   This is about policy certainty,  Namibia has known about this for years and it gets delayed and reformatted.

This is the second NEEEF conference that I have chaired and spoken at (I'll speak at every other one too) and in each case I have put a strong argument for the procurement element.  BEE as a policy exists and can measure its success because of the private sector.  Without procurement as the glue these policies will fail.  If BEE was left to the government to implement it would have fallen by the wayside years ago.  This is the issue that I have not been able to understand, how is this supposed to succeed if a NEEEF scorecard is only required for licenses and state procurement.  All the companies will just create a company for this purpose and so fronting will continue.

My two presentations are attached.  I managed to present the one on lessons from South Africa, but couldn't tear Phillip away from the audience to present my why diets fail presentation. 

Thanks to the organisers for arranging a conference that everyone enjoyed - me especially.

NEEEF has been published - probably in draft form

It's quite hard to extract the document from the Prime Minister's website so I have posted it here.  It doesn't look all that different to the earlier one I saw.  The designated group is described as “Previously disadvantaged” which means victims of Apartheid policies.  Again they've stuck to mandatory elements.

Companies tendering for Government and SOE contracts or applying for licences must receive NEEEF rating from the NEEEF Commission. This rating consists of a score out of 100.  A total of 20 points are available for each of the five empowerment pillars. Companies must score a minimum of 10 points in the three mandatory pillars of ownership, management and control, and skills development. Companies must score at least 50 points out of 100 to be considered empowered.

We'll see where this is going.  Most of my sources say that the document is still being discussed with a variety of stakeholders.  It might be easier to download it from here.  

Also if you are interested in the Namibian economy and doing business with them, you'd do well to read the TIPEEG document too. Got to love these Namibian policies and their acronyms.

 

Namibia: Private Sector Unhappy With New Equitable Economic Empowerment Framework

Not only is the private sector unhappy about not being consulted, but is equally not satisfied with the actual content, saying NEEEF does not go deeper to address inequities, unemployment and poverty as well as having the economy in the hands of the minority. Hangala, very outspokenly, said NEEEF comes at a crucial time when there is huge need for a major transformation to bring the majority of Namibians into the mainstream economy.

via allafrica.com

I didn't mention this last night. It seems as though the Prime Minister has pushed this through rather hastily

Piecing NEEF together

Slowly the pieces of the NEEEF puzzle are coming together. There is still no sight of the official document but this will come in time. The pieces come from various articles from Namibian publications. What is very apparent though is that it is more than a little similar to our own broad based BEE, a key difference being that it is destined to end on 2036 (which makes it a 25 year project). Similarities include:

NEEEF will be based on voluntary business practice" and 'Government will use all legitimate market mechanism at its disposal, in the form of procurement programmes and licensing regimes, to promote transformation and empowerment'. In other words, the whole empowerment framework boils down to the awarding of Government tenders and is otherwise left to voluntary changes.

The quote above was taken from a very informative article in the Villager written by Herbert Jauch, who seems to be a Namibian unionist of sorts. Jauch provides a short summary of the scorecard

Companies tendering for contracts from Government or state-owned enterprises (parastatals) will be rated by a newly-created NEEEF Commission according to five "empowerment pillars". These are made up of the following:

1. Business ownership with a minimum requirement of 25% ownership by 'previously disadvantaged Namibians'.
2. Management control and employment equity with a minimum of 50% of board and management consisting of such Namibians.
3. Expenditure on training and skills development with a minimum of 1,5% of gross wages to be spent.
4. Entrepreneurship development with procurement spending on goods and services to be provided by historically disadvantaged Namibians.
5. Community investments with a minimum of 1% of after tax profits to be spent on community development projects.

Not that different to BEE. Most of the reports that I have read about this tend to focus on these issues above – it suggests to me that only a summary has been submitted and the detail is to follow.

NEEEF - want to know more? So do I

This document is still somewhat elusive.  However the Namibian has offered the following:

1. the primary purpose of the proposed policy is to promote equitable, inclusive and shared economic development, to narrow income disparities between rich and poor over the next 25 years – from 2011 to 2036.  Not too different from TESEF, 25 years is a very long time.
2. previously disadvantaged Namibians will be given assistance through State-owned financial institutions like the Development Bank of Namibia (DBN) and the SME Bank to buy into existing businesses on commercial or near-commercial terms. Oh no, just like the shambles that is ownership under SA's BEE.
3. the commission that will administer Neeef consists of representatives of Government, business, trade unions “and other organisations” including the Employment Equity Commission, the National Training Authority, the DBN, SME Bank and the Ministry of Trade and Industry. (OK)
4. “equitable”  means “a fair redress and redistribution action”.  It's not clear what is being redistributed.
   
5. “social” -  is defined as “how human beings relate to each other in production, class, gender and generational relations”.  That's very loose, why would you want to define such a word.  The document will reveal all.
6.  “previously disadvantaged” -  “victims of Apartheid policies” 
7. Neeef policy states that it will be based on “voluntary” business practice, it further states that non-compliant companies will not be eligible to tender for Government or State-owned Enterprise contracts. This cannot work in SA, as much as Rob would like it to.  It also precludes the government from procuring imports, because those companies would never have NEEEF scorecards.  Not a good idea.
8. There is to be a review every five years. Companies would score points on ownership, management control, employment equity and human resources as well as skills development.
   

The New Era reports that the private sector is very unhappy with the policy, they were not given much time to respond to it.  Also, and very pertinently

NEEEF replaces the Transformation of Economic and Social Empowerment Framework (TESEF), much to the disappointment of the private sector that says constant changes in the names indicates indecisiveness on government's part.

There doesn't seem to be much certainty in this policy.  And the one thing the private sector really appreciates, it's certainty.  Humans are very adaptable and will do anything you legislate, but the process is made so much easier if the parameters are well defined.

I'm still looking for a copy of the NEEEF, so if anyone has one please send it to me.

 

 

Namibia: TESEF replaced by NEEEF

WINDHOEK - The New Equitable Economic Empowerment Framework (NEEEF), Namibia’s new euphemism for black economic empowerment (BEE), has ruffled the feathers of the private sector.

The private sector says there was no prior consultation on NEEEF and that the new plan lacks determination to address the root causes of economic inequalities in the country.

via www.newera.com.na

The Namibians have a new transformation system which seems to have replaced TESEF.  This notice from the 19th of October (2011) tells us more  

The Namibian Government is to implement a plan that would empower previously disadvantaged communities to benefit from economic activities in the country. Prime Minister Nahas Angula tabled the New Equitable Economic Empowerment Framework (NEEEF) in the National Assembly

The New Era provides the following insight into NEEEF

NEEEF would make use of a rating system that allocates points to private companies on five empowerment pillars to determine whether they satisfy the requirement to be considered empowered. Fishing, manufacturing, construction, trade, tourism, telecoms, logistics, mining, agriculture and financial services, are the sectors targeted. 
The programme is to be in place for 25 years starting this year until 2036, but components would be adjusted according to experience and circumstances. 
A commission for Equitable Economic Empowerment will provide a written annual report to the Prime Minister and parliament on progress on NEEEF. 
There would be a review every five years. Companies would score points on ownership, management control, employment equity and human resources as well as skills development.

The article suggests that the plan is to be elaborated today.  If anybody gets an early release please send it to me.

The Conundrum of Tender Politics - not specifically a Namibian issue

In the final analysis, it is not about a good law or procedures, but political will, maturity, tolerance, justice and fairness to conduct equitable and fair tender procedures.

via www.informante.web.na

Beautifully summarised in the last sentence. The same allegations we South African level at our politicians are being thrown at the Namibian elite. I don't think this is a strictly African feature but it is very prevalent on our continent.

The deeper issue with Namibia is Namibianisation - a transparent and equitable state procurement system would go along way to solve this problem.

TESEF and Windhoek

Did I mention that Windhoek is one of the nicer African cities?  If I didn't then it is an incredible omission.  I was last there about seven years ago and it has changed so much since then - huge buildings have gone up, there are malls and fantastic hotels.  It still hasn't lost its old charm and Joe's Beerhall is still a hit.

Obed de Swardt and I went up there at the request of a few Namibian companies to go and talk to them about BEE/TESEF and the like.  It was a fantastic experience, the hospitality and warmth is something we all should experience.

This is what we learned.

1. TESEF falls under the Office of the Prime Minister.  It would appear that the Prime Minister is somewhat alone in this process.  There is a school of thought that it should fall within the  Namibian DTI.  
2. The issue between the Office of the Prime Minister and the DTI might be the reason as to why TESEF still remains a strategy.   It might just be that the Prime Minister is pushing for TESEF on his own and not getting a great deal of support from the rest of the Namibian government.
3. A rumour suggests that TESEF will be replaced by the New Framework on Equality & Empowerment (perhaps the new acronym might be NFEE).
4. The Namibian Financial Sector was tabled in 2009.  This is a great document that focuses on the Namibianisation of the financial sector, it speaks of BBEE (broad based economic empowerment). Namibianisation should be a greater priority than BEE - a startling percentage of the Namibian economy is in foreign hands.  

I'll be back soon.  

Windhoek trip at the end of the month

Obed de Swardt of BEE-Matrix and I are heading up to Namibia at the end of this month.  We've set up a few meetings in Windhoek but would like to meet as many people as possible.  If you are a reader of this blog and are available on the 29th and 30th, please send me a mail to arrange a meeting.

 

 

Namibian mining from Tim Cohen

Namibia, has also started on the nationalisation course, causing a number of mining stocks on the Australian stock exchange to tank, and showing how contagious bad policy can be.

via www.businessday.co.za

Why they don't learn from each other I don't know.  Cohen colours an interesting picture about Zim and how Morgan and his crowd might not be as angellic as they would like us to believe.